The money comes from steem currency. Think of it as a fee of the users. When you up vote something you are telling steem "this is good content and I support it" then steem looks at how many up votes the post got, and converts it to steem money which you get a payout. You can check your wallet in the settings. The more content that is created and published, the more steem currency is created.
RE: still trying to understand steem